The Gig Economy: Challenges

Abstract

The term “gig economy” is defined as a market which is based on a fixed-term contract or that is paid per project by a company, third party, or online marketplace (Roy, 2020). The market has grown tremendously with the rise of the internet and is especially growing rapidly in developing countries such as India. India has the fifth largest population of gig economy workers, and by 2030, this could improve to 3rd place. By 2030, there is also an estimation that India’s gig economy workers will rise by around 200% and contribute to around 2.5% of the GDP. Although this is true, certain challenges are being faced, such as workers being treated poorly and the legal framework for the gig economy not being framed properly in India and the rest of the world. Therefore, this leads to laws which are ineffective in addressing the challenges. This article aims to look at the existing literature on the problems of gig economy workers, make these challenges more recognizable to people, and potentially offer certain solutions to improve the gig economy system that is in place for the workers. 

Introduction

The gig economy is defined by a labour market where there is a greater prevalence of short-term and flexible contract workers rather than permanent full-time workers. Examples of gig economy workers include Zomato, Rapido, consultants, etc. These workers generally differ from the normal kind of workers. These workers depend more on fulfilling their tasks to get paid rather than being offered a fixed amount of pay and job security. The Indian government has split gig economy workers into two categories; platform workers and non-platform workers. A platform worker is a worker who works for companies which have online platforms, such as Amazon and Swiggy delivery workers. Non-platform workers are workers who do not work under such platforms; examples include construction workers and non-technology temporary workers. 

History Of Gig Economy

The Gig economy working model was formed way back during the post-WW2 era when temporary job agencies offered temporary workers to companies looking to fill short-staff positions. This further evolved with the internet being used and websites such as Craigslist being formed where workers can post online about their experience and job skills; with this, the gig economy truly expanded forward. With this model in mind, more companies have hired temporary workers, and some companies, such as Ola and Swiggy, run their entire business on those types of workers. Gig economy workers first started being recognized as workers in the legal system by the US. However, there needs to be more recognition and laws pertaining to gig economy workers in countries around the world.

The Stakeholders

There are three stakeholders in the gig economy. Firstly, there are companies which hire gig economy workers; they usually hire them from online platforms such as Uber drivers and Zomato delivery workers. Second, there are the workers who work under these companies, and lastly, the government, which acts as a mediator between these two and passes laws which will directly impact both the company and its workers. In India, the government has formulated many laws to protect gig economy workers; some of them are included in the CLRA, UWSSA and other construction workers acts (Ramesh, 2023). However, these laws were made much earlier and do not affect a large portion of the modern gig economy workers, the platform workers. Therefore, the platform workers’ ratio between gig and non-gig economy workers is 20:1, and these people do not have any liable protection towards them (Ganguly, 2024). Therefore, this leads to problems like salary shortfalls, lack of insurance coverage, income fluctuations, and a lack of job security.

Benefits and Drawbacks of the Gig Economy

There are certain benefits and drawbacks to the gig economy for workers. Firstly, the advantage is that people can have the flexibility to work, meaning they can work two to three different jobs, giving more variety of work, making it interesting for them to work at. Second, the company cannot have its hold over them, meaning the workers have the independence to work as they wish to with whoever they want without the companies’ contracts hindering them. The disadvantages, though, are that gig economy workers usually have higher work hours than regular workers. This is due to the fact that no company benefits or work hours are being put on their contract, leading to a loss of work-life balance and exhaustion. Another disadvantage is that the company benefits themselves, with no health insurance, no paid leaves, or job security. Temporary workers working in gig economy lack many things permanent workers normally get offered. This is also due to government laws not directly targeting gig economy workers specifically, so there are a lot of loopholes that can be exploited against them.

Solutions

The gig economy is a contentious subject, and many reforms still need to be made to improve the lives of the workers working in that labour market. To go forward with these reforms, certain conditions have to be met, though, firstly, a better legal structure is needed to affect the gig economy workers. Currently, India barely recognizes gig economy workers and only construction safety laws are covered. Platform workers need to have the distinction of being covered, unfortunately, and when the government makes laws pertaining to platform workers as well, then only can there be a better solution for gig economy workers' problems. Another solution could be for the workers to unionize themselves; with better unionizing, there is greater bargaining power for them, and with that, they can negotiate better benefits for themselves.  Currently, the All-India Gig Economy Workers Union offers significant support for gig economy workers (Shukla, 2024) but this could be improved further with more publicity.

Conclusion

The gig economy is still growing, with countless people joining their number; there is a growing change in India and the world among workers for greater flexibility and choosing their schedules. With these growing numbers, the government must realize and change the legal framework for these workers to protect them and ensure that they, too, receive better conditions just like full-time workers. With only significant changes can the gig economy improve itself and bring forth real change.

References

Ganguly, S., & Ramesh, A. K. (2023, January 25). India: Rules governing the gig economy.  Lexology. https://www.lexology.com/library/detail.aspx?g=0a14cdc3-5b43-472c-8974-5bcd43e74096

Roy, G., Shrivastava, A. K., & International Management Institute Kolkata. (2020). Future of Gig Economy: Opportunities and challenges. In IMI Konnect (Vols. 9–9, Issue 1). https://www.researchgate.net/profile/Gobinda-Roy-2/publication/340253836_Future_of_Gig_Economy_Opportunities_and_Challenges/links/5e7f62bea6fdcc139c0f752b/Future-of-Gig-Economy-Opportunities-and-Challenges.pdf

Ganguly, S. (2024, March 31). India: Rules governing the Gig Economy - Acuity Law.    Acuity Law. https://acuitylaw.co.in/india-rules-governing-the-gig-economy/#_edn3

Rise of the “gig” economy. (n.d.). https://businessindia.co/magazine/rise-of-the-gig-economy
             Your economy, our livelihoods: A policy brief by the All-India Gig Workers’ Union —

The   Centre for Internet and Society. (n.d.). https://cis-india.org/raw/your-econonomy-our-livelihoods-a-policy-brief-by-the-all-india-gigi-workers-union
 
About the Author

Vrishaank Sharma is a research intern at CDPP. He currently studies economics and business analytics at flame university in Pune. He has a keen interest in all economic topics but particularly in macroeconomics and labour economics. He also loves keeping updated on current affair topics.